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Politicians and officials are “kidding” themselves and taxpayers over the true scale of national debt, which in reality puts the Conservatives on course for substantial tax hikes or deep spending cuts, two senior Tories have warned.

In a letter to Philip Hammond, Ken Clarke, the former chancellor, and John Penrose, an ex-Cabinet Office minister, said official figures gave an “over-optimistic picture” of the country’s debt because they exclude billions of pounds in future payments, including on private finance initiative (PFI) contracts and state and public sector pensions.

Mr Clarke and Mr Penrose claimed the current figures “hide economic reality” and called on the Chancellor to instruct the...